Succession Planning Series: Part 3 – Sale Preparation and Due Diligence

You’ve decided to transition your business—now what? Before you sign on the dotted line, preparation is key. A well-prepared business not only attracts more buyers but also commands a higher price and ensures a smoother process. This is where due diligence comes in.

Why Preparation Matters

Buyers want confidence. They want to know your business is stable, profitable, and free of surprises. The more organized and transparent you are, the easier it is for them to say “yes” and the better your negotiating position.

What Is Due Diligence?

Due diligence is the process buyers use to verify the details of your business. They’ll review financials, legal documents, operations, and risks. If they find gaps or inconsistencies, it can delay the sale or reduce the price.

Steps to Get Ready

1. Organize Your Financials

Clean, accurate financial statements are non-negotiable. Make sure your books are up to date, tax filings are complete, and any anomalies are explained.

2. Review Legal and Compliance Issues

Ensure contracts, licenses, and permits are current. Address any pending litigation or regulatory concerns before they become deal-breakers.

3. Strengthen Operations

Buyers look for businesses that run smoothly without heavy owner involvement. Document processes, update policies, and make sure your team is prepared for the transition.

4. Identify and Mitigate Risks

Customer concentration, outdated systems, or unclear intellectual property rights can raise red flags. Fix these issues early to protect value.

The Payoff

Preparation isn’t just about avoiding problems, it’s about maximizing value. A business that’s well-organized and transparent stands out in the market and gives buyers confidence to move quickly.